IT Notice to Google

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Friday, 9 December 2011
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Friday, December 09, 2011

Around the same time Telecom Minister Kapil Sibal was planning to pull up Google,the Income-Tax Department was giving the final touches to a tax demand on the Indian arm of the global search engine company.Google India Pvt Ltd,according to the tax office,has not offered its entire income for taxation and the profit and loss account filed by the company does not give complete picture of the businesses.

The department has questioned Google Indias practice of paying tax on its net income from advertisements,after crediting a sizeable amount as distribution fees to Google Ireland.Google India runs the Adwords programme whereby advertisements that appear on its website are sold in India to Indian business establishments.Tax officers have built their argument on the basis of the contract between Google India and Google Ireland.As per this,Google India is conducting the business and obtaining revenue from Adwords programme on its own account.This,according to the I-T departments interpretation,makes Google India a separate entity that should declare its full income for tax purpose, said a person who is aware of a tax assessment order that was served on Google India this week.For the assessment year 2008-09,the order says Google India has admitted revenue of only.Rs.7.49 crore instead of showing the correct revenue of.Rs.167.32 crore.Besides,no tax was deducted at source against the amount credited to Google Ireland.Based on the tax on the gross income and TDS,the department has made a claim of.Rs.74 crore for the year.Google India spokesperson did not reply to a text message and an email query from ET.The firm is learnt to have told the department that there is no omission in accounting of the revenue and the transaction with Google Ireland is at arms length and adequate documentation has been maintained to substantiate this. - www.economictimes.indiatimes.com